Business
In the midst of bad loans rubbles and shifty investors' confidence, State Bank of India (SBI) is seeing green shoots appearing. Country's largest banker, having a keen understanding of the state of industrial environment, believes a turnaround is just two quarters away with the economy definitely picking up in the last quarter of the FY16.
Updated : Mar 20, 2018, 02:21 AM IST
In the midst of bad loans rubbles and shifty investors' confidence, State Bank of India (SBI) is seeing green shoots appearing. Country's largest banker, having a keen understanding of the state of industrial environment, believes a turnaround is just two quarters away with the economy definitely picking up in the last quarter of the FY16.
"The project pipeline, which was very thin even in the last quarter we are seeing more and more projects coming in. It's still not a flood but many projects are getting submitted. My own anticipation is another two quarter down the line we would definitely see the pick up happening. The last quarter of the current financial year would actually be quite good," said bank's chairman Arundhati Bhattacharya.
Bhattacharya is confident enough to project doubling of SBI loan book growth to 13-14% in the current year from 7.25%, touching Rs 13,35,425 crore in FY15.
SBI's loan growth was muted compared with the industry average of 12.6% but Bhattacharya said a part of the advances were given in the form of Commercial Papers, which shows up on the investment side. Otherwise, SBI's loan would have grown by 10.5%, the chairman claimed.
Country's largest lender initially delighted investors during Friday trading hours reporting a steep 23.1% growth in bottomline at Rs 3742 crore, up from Rs 3040.7 crore in corresponding quarter last quarter.
Net interest income or the excess of interest earned over interest paid, a bank's key performance parameter, went up by a handsome 14% on year to Rs 14,712 crore from Rs 12,903 crore. These figures were much better than any of the analysts' polls which estimated net profit growth of anywhere between 15% and 20%.
But then, it was discovered that the bank has a significantly high level of restructured assets during the fourth quarter to the tune of Rs 11,800 crore. It spooked the market and pulled down the stock, which ended down 2.38% at Rs 282.35 after touching a high of 304.75 during mid trading session.
Bhattacharya told the reporters post earnings that it was mainly due to a rush before restructured assets are treated as NPAs. "There is a lot of conjecture about what led to this, which is clearly due to the window shutting. From April 1, any restructuring has to be treated as non performing assets. So whatever accounts having some kind of weakness but not immediate need for restructuring were restructured as people don't want the NPA tag. That is why the restructured number is higher than we expected. This is largely contributed by very many small accounts," she said.
Slippages dropped significantly at Rs 4769 crore considering previous year's level of Rs 7,947 crore. Sequentially, slippages are coming down from a level of Rs 9932 crore in the first quarter of FY15 to Rs 7043 crore to the current level of Rs 4769 crore. "Drop in slippages are showing up in the strong performance at the Net Interest Income (NII) side," the chairman said.